India’s ed-tech unicorn Byju’s has set itself up for another round of firings. As many as 1,000 employees are expected to be laid off as part of a cost-cutting strategy aimed at streamlining operations, several media reports claimed on Thursday.
The contractual staff of on-ground sales teams and third-party staffers, such as Randstad and Channelplay, are likely the ones to receive the axe. The news of Byju’s laying off its employees comes days after it was revealed that the company had skipped quarterly interest payments of about $40 million on a $1.2 billion term loan.
Byju’s has been in a tight spot for the last one-and-a-half years. The company’s online coaching business and its appeal have petered out as parents and children prefer offline modes of education.
Previous rounds of firings
Despite having a war chest in funding, Byju’s has been on a firing spree. In February earlier this year, it laid off nearly 1,500 employees across design, engineering, and production verticals.
The layoffs followed an earlier round in October 2022 when contracts of over 2,500 employees were terminated, sending shockwaves across the ed-tech sector. Founder-CEO Byju Raveendran said at the time that he would see that laid-off workers were given access to newly established relevant positions and that they would be rehired.
“I have already instructed our HR leaders to make all the newly created relevant roles available to you on an ongoing basis,” Raveendran wrote in an email to employees.
ED raids Byju’s premises
In April, the problems compounded for the company when the Directorate of Enforcement (ED) raided two business premises linked to the company and one residential property linked to its founder Raveendran Byju, under provisions of the Foreign Exchange Management Act (FEMA).
The agency noted that Byju’s received Foreign Direct Investment (FDI) worth Rs 28,000 crore ($3.4 billion) between 2011 and 2023. Moreover, the company sent Rs 9,754 crore ($1.1 billion) overseas as FDI which is currently under the scanner.
The company has also been in controversy for using predatory practices to brainwash parents and get their wards signed up for highly expensive courses. Last year, India’s apex child rights body the National Commission for Protection of Child Rights (NCPCR) summoned Raveendran over the issue.
“The Commission is in observance that indulging into malpractices to lure the parents or children into entering loan-based agreements and then causing exploitation is against the welfare of children and in pursuance of the functions and powers under Section 13 and 14 of CPCR Act, 2005,” said the commission.
The hybrid strategy of amalgamating its online and offline classes appears to be the last straw that can save Byju’s which, otherwise, is staring down the barrel of a difficult future.
(With inputs from agencies)